January 16, 2012
By Mish Schneider
Standard and Poor's gave everyone something to write about over the weekend with their EU Downgrades wreaking some havoc on Friday in the market. And once a market creeps up on low volume, there is never any great surprise when it comes tumbling down just like that! Of course, the real question is-was that a reversal or a good, healthy cleaning out of the weaker longs? Earnings Season has begun!
S &P 500 (SPY) The breakaway gap is off the table. SPY held the 10 DMA. Volume on Friday created a distribution day. It has pulled back from the attempt to take out the 10/27 high, but maintains in an accumulation phase with positive sloping moving averages and a longer term positive phase intact.
Russells 2000 (IWM) Held the 200 DMA but could not close out the week over the 65-weekly moving average. Also a distribution day in volume. Not irreparable damage but definitely worth watching if fails 75.90. And at this point, needs to clear 77.00
NASDQ (QQQ) Since this had the breakaway gap before the other indexes on the first trading day of the year, it is here we must watch to take the lead. Some important earnings coming up.
XRT (Retail) Closed pretty much in the middle of the New Year's trading range leaving the next direction unclear.
XLF (Financials) In order for the breakaway gap to stay in place, XLF must not trade below 13.55. With Friday's EU downgrade news, the low was 13.58, hence the gap remains intact. Watching to see if XLF continues to hold the gap. And considering the round of earnings forthcoming, if it does, will take that as a positive sign for this sector.
IYR (Real Estate) Good close on Friday. 57.89 the point to clear. Then could see 60.00.
IBB (Biotechnology) The gift that keeps on giving since it cleared 2011 high. Hard to get real negative with this sector so strong.
SMH (Semiconductors) Backed away from 32.74 the 11/16 high and held the breakaway gap. Under 31.34 not a good sign, but if holds here, remains a great potential.
XLE (Energy) managed a close above the 50 DMA after 3 rough days down. At this point, would look at a rally as a point to short. That changes only with 2 closes above the 200 DMA.
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